Retailers: Holiday sales starting strong

NEW YORK -- Retailers got what they wanted over the Thanksgiving weekend -- a strong start to the 2006 holiday shopping season.

Stores and malls drew a bigger-than-expected turnout, and robust sales for the first day of the season offset slower business as the weekend wore on, according to early reports.

The biggest winners appeared to be electronics chains such as Best Buy Co. and popular-priced department stores including J.C. Penney Co. Yet Wal-Mart Stores Inc., which promised the most aggressive discounting ever, was an exception, saying Saturday that same-store sales for November will be slightly below its already lackluster forecast. Wal-Mart has struggled for months to appeal to both higher-income shoppers and low-price fans.

The question for the retail industry overall is whether the bargain hunters who raided stores for early bird specials over the weekend will have the same zeal as they shop between now and the end of the season.

"The hysteria has come down a bit, but it was a great start," said Bill Martin, cofounder of ShopperTrak RCT Corp., which tracks total sales at more than 45,000 mall-based retail outlets. But he said the true measure of the season is whether "retailers can sustain the loyalty and excitement" until the end.

Martin expects that total retail sales for the first weekend of the season will be higher than last year, boosted by Friday's better-than-expected business. Total sales rose 6 percent to $8.96 billion that day, compared to a year earlier, according to ShopperTrak. The company planned to report Saturday's results today.

Retailers' strong performance was a direct result of their aggressive discounting and promotions, designed to get consumers to start shopping early. More stores and malls opened at midnight Friday, and Toys "R" Us Inc. and Sears Holdings Corp.'s Sears stores opened at 5 a.m., an hour earlier than in the past.

Jerry Storch, chairman of Toys "R" Us, said he was pleased with results for the weekend. In addition to Mattel Inc.'s Fisher-Price's T.M.X. Elmo, hot toys include Fisher-Price's Kids Tough Digital Camera, and some of the toy retailer's exclusives like VTech Holdings Ltd.'s pink Nitro Notebook, a laptop computer.

Gail Lavielle, spokeswoman at Sears Holdings, which also owns Kmart stores, said the stores were busy through Friday and Saturday. At Sears, flat-screen TVs, digital cameras, and Craftsman tools were the hot items. At Kmart, holiday decor including Christmas trees, jewelry, and toys were the most popular.

Retailers were optimistic but also a little uneasy going into the season, concerned that economic factors like the slowing housing market might make shoppers more conservative. And many shoppers interviewed during the weekend said they were trying to be budget-conscious.

Karen Garcia, who was shopping Friday in a Buffalo, N.Y., suburb, said she planned to spend less this year. "We're just downsizing because it's getting a little out of hand. You just pick and choose what you want instead of going out and you have to have everything," Garcia said.

Still, the discounts accomplished what they were supposed to do for many retailers -- get consumers spending early. Penney said in a statement Saturday that the holiday shopping season was "off to a good start."

Karen McDonald, spokeswoman at Taubman Centers Inc., which operates or owns 23 malls in 11 states, yesterday reported "two solid days of post-Thanksgiving business." According to a sampling of half of Taubman's malls, business was up in the low to mid-single digits. The most popular items were consumer electronics, cosmetics, and toys; the weakest category was home furnishings.

But Wal-Mart had a slow start despite come-ons that included special offers on flat-screen TVs. The discounter said it expects to report a same-store sales decline of 0.1 percent in November, slightly below its projections for flat sales for the month. The results puzzled analysts as Wal-Mart has stepped up its discounting throughout the month, including offering certain generic drugs for as low as $4 per prescription.

As for Black Friday, C. Britt Beemer, chairman of America's Research Group, speculated that Wal-Mart customers might have looked only for special offers and so didn't shop the entire store.

A clearer picture of how retailers' sales fared over the weekend will emerge Thursday, when merchants report monthly sales results for November.

"Consumers wanted bargains, and more bargains," said Beemer. "You have to give the customer what they want at the price they want to pay or else you will lose them."